Premium Credit Counseling Challenges

1. Premium Credit Counseling Challenges Tara Straw March 4, 2013

2. Counseling for Now and Later • What to think about in 2013: • Accurate and complete information • Filing requirement • Filing status • Confronting expectations and preferences • What to think about in 2014: • Staying up-to-date on changes in income and family • What to think about in 2015: • Dependents • Reconciliation or penalty

3. The Basics about the Premium Tax Credit • Premium credits help pay for health plans • People can receive the credits in advance but might need to pay back excess at year end • Some plans (‘silver’ level plans) have lower cost-sharing for people with incomes up to 250% of poverty

4. Qualifications for premium assistance • Must have income between 100-400% FPL • Cannot have minimum essential coverage • Does job-based plan cost more than 9.5% of household income for single coverage? • Does it meet minimum value? • Cannot be eligible for public coverage • Must have a valid SSN

5. Requirements • Must plan to file taxes • People with previous unpaid taxes may be deterred • Must file jointly if married • Rules to come re abuse/abandonment • Advance credits are based on projected annual income • Reconciliation

6. What is Effective Assistance? Is it … • The most accurate amount of tax credit today? • The most accurate amount of tax credit based on estimates for the entire year? • The highest amount of credit? • The credit with the lowest risk of repayment? And will client, assistor/navigator, and tax preparer all agree?

7. 2013 Counseling Challenges:Getting to Square One • The starting point on premium credit eligibility are the tax returns being filed right now (2012 income) • What has changed between now and open enrollment? And what will change again by December 2014? • Initial application burden • Special case: People without a valid social security number

8. Application Issues • Should I take less assistance in advance? • What plan should I select, considering benefits, premiums, and cost sharing assistance? • What if only some members of my family need coverage? • What if electronic data not available or doesn’t match? • Medicaid, CHIP, Basic Health, Premium Tax Credit disputes

9. 2013 Counseling Challenges: Information • Anticipate incomplete information on: • Employer offer of coverage & cost of coverage • Inconsistencies? • Income • Cash income • Wages from multiple part-time/part-year jobs • Knowledge of who in the family currently has coverage and how • Presence/absence of wellness incentives • How accessible will information be?

10. 2013 Counseling Challenges: Filing Requirement • Filing Requirements: • Single - $9,750 (~87% FPL) • Married Filing Jointly (with no kids) - $19,500 (~129% FPL) • Head of Household (with two kids) - $12,500 (~65% FPL) • Generally, people below filing requirement will be Medicaid eligible (in expansion states) • Who might fail to file? • IRS (or other) collectible debt • Good news: advanceable premium tax credit won’t be used to offset debt

11. 2013 Counseling Challenges: Filing Status • Joint filing requirement • No credit if married filing separately • Similar to EITC and other credits • Prospective/retrospective problem • Marriage/divorce counselor • How does someone change the presumption? • Exceptions for … • Survivors of domestic violence? (And others?) • When? • How?

12. 2013 Counseling Challenges: Expectations & Preferences • Reluctance • Perceived value of coverage • Skepticism • What’s the catch? • Gaming • Due diligence • Advanced credit, lump sum or something else? • Lump sum won’t be a viable option for most • Fixed penalty vs risk of repayment

13. 2013 Counseling Challenges: Expectations & Preferences • Learning from the EITC • Barriers toward use of advanceable credits • Lack of awareness • Uncertainty • Desire for a large refund • Perceived inability to save • Premium tax credits can be different because: • Infrastructure for accessing them • Penalties for failure to obtain coverage • Inability to collect large refund without incurring large costs

14. 2014 Counseling Challenges • Who, what, when of reporting income & family changes, including filing status • Avoid large obligations at the end of the tax year • Affects cost-sharing meanwhile • Duty to counsel on this but it may be a deterrent • Changes in the offer of affordable job-based insurance • Due diligence with the “silent” exchange • Can I trust the Exchange and my insurance company to make timely and accurate changes based on my information?

15. Special Enrollment Periods • Loss of coverage • Gain dependent • Change in immigration status • Gain eligibility for tax credit • Move • QHP violates contract with respect to enrollee • Error (sometimes) • Exchange-provided exception

16. 2015 Counseling Challenges: Reconciliation • Filing Status • If Married Filing Separately – exceptions? • Potential effects on dependency exemptions • Dependents who are not your school-aged children • “Qualifying relative”  Older kids, other relatives, members of your household who are not related to you • To claim exemption, must provide more than ½ of person’s support, including health care. • Support by the government is not support the taxpayer is providing

17. 2015 Counseling Challenges:Reconciliation • Reconciliation • Re-enrollment: Was it worth it?

18. 2015 Counseling Challenges:Penalty • Penalty the greater of a flat dollar amount or a percentage of taxable income. • 2014: $95/adult or 1% of taxable income • Exemptions if: • No “affordable” coverage (in 2014, costs >8%) • Income below the tax filing requirement • Uninsured < 3 months • Undocumented immigrants • Hardship • Incarcerated • Membership in certain religious sects  • Motivation or anger?

19. Community Tax Partners • Volunteer Income Tax Assistance (VITA) • Free tax assistance for people with income below $51,000 • Tax Counseling for the Elderly (TCE) • Free tax assistance for people age 60 and older • Visit irs.gov for a list of programs in your community

20. What can advocates do? • Develop local partnerships • Work with tax partners and others • Comprehensive public education • Comprehensive training of enrollment staff and volunteers • Prepare for the unexpected • Expect the unprepared • This is a multi-year effort!